Health insurance companies use a formulary system to help control costs while providing safe, effective medications. A formulary is a listing of brand name and generic medications that are preferred by your insurance company. The list contains information about how the drugs are made and why they are used. Medications not on the list are considered non-formulary.
Insurance Coverage for Non-formulary Drugs
Your non-formulary prescription may be covered by insurance based on the type of formulary your insurance company uses. An "open" formulary allows coverage for most drugs; however, you will have to follow the procedures and meet the criteria established by the insurance company to obtain coverage for a non-formulary drug. A "closed" formulary does not pay for non-formulary drugs.
Who Decides Which Drugs Are Non-formulary?
Formularies are created by a group of physicians and pharmacists from a wide variety of medical specialities. The group members, who typically do not work for the entity that requires the formulary, review new and current medications and make their formulary selections based on patient demographics, the effectiveness and safety of the drugs, and their costs. If the criteria are not met, a drug is considered non-formulary and is not included on the list.
What Types of Drugs Are Non-formulary?
According to the UCLA Department of Medicine, formulary committees often omit highly effective drugs and consider them non-formulary if they are new or if they are too expensive. Medications that are not FDA-approved are non-formulary as are FDA-approved drugs that are prescribed for purposes other than what they were approved for. Over-the-counter medications are non-formulary as well.
What to Do When Your Medication Is Non-formulary
If you are prescribed a medication that is non-formulary, talk to your doctor to see if a different medication on the formulary would work just as well. You may also request an exception from your insurance company for the non-formulary drug. Your doctor will need to send documentation to the insurance company stating that the non-formulary drug is medically necessary to treat your condition. Another option is to pay full price for the drug.
Cost of Non-formulary Drugs
Some insurance companies provide no coverage for non-formulary medications; therefore you will have to pay out-of-pocket for the drug. Other insurance companies will pay a small amount towards a non-formulary drug. In some instances, your policy may charge the formulary co-pay for a non-formulary drug if your doctor indicates “dispense as written” on the prescription. Usually, the amount you pay towards the non-formulary drug will not be applied to your annual out-of-pocket maximum and will not qualify for 100 per cent coverage after you meet your maximum.